Mortgage Pre-Payment?

simplyelise · April 2015

RosieC18 said:
That's good to know. I've mostly been going off of this one, which seems pretty comprehensive and customizable: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

So, it includes closing costs for both buying and selling, the rate of return if you kept your money elsewhere, rent increases, rental v. homeowners insurance, taxes etc. However, it doesn't include furniture, landscaping or renovations some of which we would probably do. I also took them at the default for annual maintenance, which may be off. It also assumes that you're renting a comparable space, which we wouldn't necessarily do, at least immediately.

I'm a renter and I think that tool does look pretty comprehensive, but their starting utility cost is ridiculously low. On a second floor apartment with fewer exterior walls, our utilities are way lower here than they would be in a home. This is especially true if you buy and older home that doesn't have new windows.

RosieC18 · April 2015

Yeah, I definitely bumped that one up in my calculation, but it's really hard to predict in the abstract because each house/apartment is different.

formerlyGDaisy09 · April 2015

RosieC18 said:
This is all really interesting, thanks guys. For those of you who are pre-paying, how long do you expect to stay in this house?

honestly if it weren't for our yard (teenie-tiny) I'd want to stay in our house forever. it's in the perfect location, the neighborhood is nice. and the house has the potential to expand, we're working to finish the basement right now. the contractor told us that our house was designed with the intention that it would be easy to add a second story (our neighbors recently did this and I was surprised how quickly it happened). I don't think we'll end-up going to that extreme with construction, but it's nice to know it's possible. We'll probably try to stay where we are for another 7-10 years then look for our forever home with a larger yard.

kmurphy2131 · April 2015

hoffse said:

RosieC18 said:
Yes but have you included the money you lose in closing costs both directions (especially selling when you are paying a 6% realtor's commission)? That's where the 5-year recommendation usually comes into play. Your house has to increase in value enough to off-set those costs, otherwise you are losing money when you move.
I know DC is a hot area, but make sure you know exactly what those calculators are including. I looked at them too, and they were way off for us.
It's anecdotal, but those calculators haven't even come close to how much we've spent on the house since moving in. I don't regret buying because it has given us a better location and significantly more space. We also have just over a half acre of land. The actual mortgage part of our payment is $100 more per month than rent was, and it has tripled the amount of usable space we have. But the mortgage is just part of it - we've spent a LOT more on things like furniture, home improvements, ripping out the nasty carpet and installing hardwood, etc. Plus you have to include taxes and insurance, which aren't insignificant. That's where those rent v. buy calculators usually fail hardcore.
Honestly - if we had not been able to gain this much space, we would have continued to rent.

I am happily continuing to rent for that reason. Yes, we would have our own land which would be nice (except we aren't interested in doing upkeep...) But we would get only a slightly bigger space and likely would be investing a lot of money to get the type of stuff we have here (granite counter tops, nice floors, good insulation, nice appliances) I really feel like we would spend so much more money to be living in a house despite renting being "throwing money out the window"

**EDIT: I originally quoted the wrong post, therefore my comment made NO sense at all

Wulfgar · April 2015

I am hoping to make our current home our forever home. We are perfectly situated in our town on the East end near the major East/West & North/South interchange so getting almost anywhere is pretty fast and easy.

We are just going to see how the neighborhood changes over the years, if it goes down hill then we may move North to a more expensive suburb with better neighborhoods in most of the area. The bad thing is that the houses are roughly 40 to 70k more for the same house where we are living.

Mortgage Pre-Payment?

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